The imaging industry is currently under a great deal of pressure. This outlines some of the current issues and observations relating to imaging.
1. Technology and Innovation.
Notwithstanding the scrutiny being levied upon the imaging industry, the improvements in technology and innovation continue to be amazing. This point is often lost in the face of the numerous different complaints coming from regulators and payors related to the increase in imaging supply.
2. Governmental and Payor Perspective.
There is widespread belief amongst payors andthe federal government that two things occur with the development of imaging. First, that improvements to technology add cost to the health care system. Second, that the increase in supply drives demand. In essence, the more imaging facilities that are in business, the more imaging procedures are provided. The belief is that the demand of patients for better diagnostics does not lead to more demand. Rather, it is more owners of the imaging technology that are out pushing hard to sell imaging that leads to greater cost and greater use of imaging technology. Further, they do not see the increase in imaging facilities leading to any price erosion or price competition. This last point, to date, is largely true.
3. Government Perception of Legitimacy.
The government does not perceive that every provider of imaging is involved in an improper scheme or some method to simply reap profits. They tend to perceive that there are a handful of providers that are legitimate providers not interested in simply reaping profits.
4. Stark Services.
Imaging providers and radiation therapy providers are Stark services. This means that they can only be provided and owned by physician owned groups, unless in a rural area, through a group practice exception. We would be very mindful of situations in which lawyers or consultants provide physicians and providers with "creative" schemes or models aimed at allowing physicians to access profits from imaging. Here, we would aim to stay on the more conservative side of the line as to the method by which to provide services.
5. Best of Times and Worst of Times.
It appears to be essentially the best of times for radiation therapy providers. There seems to be great interest in development of radiation therapy facilities. There also seems to be a window of time in which this will be a very profitable business. In contrast, for imaging providers, particularly MRI and CT, this no longer seems to be the best of times. As measured by the number of inquires we get from people at national companies looking to either sell their companies or engage in a job search to find a job outside the imaging industry, it is becoming a challenging time in this industry.
6. The Check is in the Mail.
One common perception that is proving to be untrue is the concept that as long as you serve "commercial pay" patients only you have great freedom to do whatever you want. In fact, as we are witnessing increasingly, state attorney generals and managed care payors are attacking commercial pay ventures based on the concept that such ventures violate other state laws whether they be consumer practices laws, deceptive trade practice laws or state anti-kickback laws. When someone says to you that "it is commercial pay only, don’t worry," that is a good time to ask for a legal opinion. 7. Per Click. Increasingly, states and payors are attacking per click efforts. These are situations in which a referring physician buys an image from a acility and then resells it or bills it himself to a payor or payors. Here, a business practice like this was recently attacked by the State of Illinois as it brought actions against several different imaging providers. Here, the more that the referring practice can be shown to actually be the provider of services as opposed to simply a buyer and reseller, the more likely it is that this practice may survive scrutiny. The federal "purchased diagnostics rule" does not allow the mark up of imaging services and reselling of the same. In any event, there are a whole number of rules that one can adopt to do "block leasing" as opposed to per click leasing. Here, the practice wants to show that they are truly the provider of services. In all these efforts, full disclosure to the payor, if one is not the provider, may go a long way towards avoiding a suit or claim based on fraud and misrepresentation. For a list of core rules regarding block leasing, please email me at sbecker@mcguirewoods.com.
8. Raising the Bar.
Increasingly, payors are setting new requirements such that a party cannot provide and bill for imaging services unless they provide a full array of imaging services. Further, the government has introduced rules that have now been put on hold that would have provided numerous different additional requirements for imaging providers to meet in order to provide imaging services as an independent diagnostic testing facility.
9. Radiation Therapy – The 4th Wave.
Over the last several years, urologists, who receive relatively lower reimbursement for their core professional services have tended to earn a great deal of their income from ancillary ventures. These ancillary ventures in waves have included the provision of lupron (now no longer profitable to practices), the provision of lithotripsy services, the provision of prostate bratherapy services and now the provision of radiation therapy services. Radiation therapy has the potential to be the most profitable of all of these services. This is particularly true given the combination of reimbursement for the services plus the fact a great percentage of men above a certain age test positive for some level of prostate cancer or exposure to potential prostate cancer. In fact, the development of radiation therapy looks so profitable to some that it is leading to an unusual alliance in practice between radiation oncologists and urologists. For example, because radiation therapy can only be provided and owned by a
practice per the group practice exception, and it requires the help of radiation oncologists and urologists, we are seeing practices examine mergers between radiation oncologists and urologists that we would have never expected.
